When 6 Percent Interest Is Too Good to Be True

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MangoSavers have taken it on the chin for years, with banks paying almost nothing on checking and savings accounts while happily charging big fees. So when one new financial website offered a 6% interest rate on an insured savings account, you can bet it got a lot of attention.

If you've never heard of Mango Financial, you'll probably see a lot about it soon. The company signed actor George Lopez to a five-year marketing agreement, and Wednesday, it started its national "Save With Mango" campaign to promote its high-interest savings account -- as well as some other products.

Where's the Catch?

If the last several years haven't trained you to be suspicious of bank offers, you haven't been paying attention. Various big banks have tried to charge fees on everything from talking to a teller to not talking to a teller by using an ATM, from making too many transactions on your account to not making enough.

Mango tries to tap into that resentment of Wall Street, calling itself "the fresh way to manage money." Its FDIC-insured savings account promises no monthly maintenance fee and pays 6% interest on deposits up to $5,000.

But if you think that Mango's paying you a sky-high rate out of the goodness of its heart, think again.

Sign Here. And Here, Too.

You see, Mango doesn't let you open a savings account to get that 6% rate unless you also sign up for its Mango Card prepaid program. And that's where the fees start.

Mango charges a $5 monthly fee, but that's waived if you load at least $500 onto your card every month. Want money from an ATM? That'll cost you $2, plus whatever the ATM owner tacks on top of that. And although there's no charge to load the card from another bank account or by direct deposit, its Green Dot (GDOT) cash load feature comes with a $4.95 charge.

Granted, if you actually want a prepaid card, Mango's fees are actually lower than many of its competitors. And the extra interest from the savings account can certainly offset fees from the card.

For an intended audience that has gotten almost no attention from traditional banks, Mango should have broad appeal. But if all you want is a high-yield savings account without all the complications of a prepaid card, Mango's not the answer.
More on credit and debit cards:

Motley Fool contributor Dan Caplinger wishes banks would do the right thing. You can follow him on Twitter here. He doesn't own shares of the companies mentioned.




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karen and pitts

just another group of anal orifices fleecing the public. like when my son was in school and we went to a game. it was hot and a free white t shirt was the gift for signing up for a credit card. a 200 dollar limit and a 150 dollar fee to sign up was a scam. no thanks. i now have zero credit cards and pay cash. dicker for a min 3 to 10 percent discount and get it. what a sorry ass world this has become. thieves and angle workers everywhere. very sad.

February 03 2012 at 8:59 PM Report abuse rate up rate down Reply
donut999

Would be grand if if you could place $50,000+ at 6%, but most folks limited to this kind of card are lucky to have $1,000 which would only be $60 interest per year, much less $5,000. Could work for some if you completely avoided the monthly fees, atm fees, etc..

February 03 2012 at 2:27 PM Report abuse rate up rate down Reply
1 reply to donut999's comment
karen and pitts

sorry donut i miss rated your comment you are spot on. do the math is the rule but unfortunately math is not our strong suit.

February 03 2012 at 9:01 PM Report abuse rate up rate down Reply
lenny1065

What snakes!!! Lopez read the small print its your reputation that will get tarnished

February 03 2012 at 6:48 AM Report abuse +1 rate up rate down Reply
James Stein

This is becoming ridiculous. Everyone is issuing prepaid cards these days. But I have just stumbled upon yet another questionable payment product, one called Shazam. It is a mobile payments platform that would enable a cardholder to make a payment, but only after the cardholder first receives a call from the payment processor to confirm her identity. It seems to me that that the Shazam guys have completely missed a very important point when designing their service.

It is that that convenience is valued extremely highly by consumers. I mean, do they really have to call us before each single payment is processed? http://blog.unibulmerchantservices.com/m-payments-provider-wants-to-talk-to-you-before-accepting-your-payment

February 02 2012 at 6:03 PM Report abuse rate up rate down Reply